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Insights and Analysis of Asian EconomiesFri, 22 Feb 2019 06:00:33 +0000en-GBhourly1http://www.asiaconverge.com/wp-content/uploads/2015/12/cropped-AsiaConverge-logo-32x32.jpgAsiaConvergehttp://www.asiaconverge.com
3232Tripura could become an economic powerhousehttp://www.asiaconverge.com/2019/02/tripura-will-be-an-economic-powerhouse/
http://www.asiaconverge.com/2019/02/tripura-will-be-an-economic-powerhouse/#respondThu, 21 Feb 2019 05:43:07 +0000http://www.asiaconverge.com/?p=3479https://www.freepressjournal.in/analysis/tripura-could-become-the-economic-powerhouse/1465094 Tripura could become the economic powerhouse for NE India RN Bhaskar – 21 Feb 2019 Ten years ago, nobody could have imagined economically backward Tripura to become the business hub for the entre North East India. But geography, defence imperatives and political developments have propelled infrastructure development in such a way that it could

Tripura could become the economic powerhouse for NE India

RN Bhaskar – 21 Feb 2019

Ten years ago, nobody could have imagined economically backward Tripura to become the business hub for the entre North East India. But geography, defence imperatives and political developments have propelled infrastructure development in such a way that it could actually alter all equations in this region.

Take for instance the conventional routes from Kolkata to Agartala, state capital for Tripura. For almost 55 years, people had to take the road through Siliguri, going through what defence experts call the Chicken’s Neck. That is the narrow strip near which the Doklam crisis took place.

Then in 1999, the government agreed to open the road route between Kolkata and Dhaka. In 2001, both countries agreed to extend the road connectivity further by allowing buses to travel from Dhaka to Agartala. Thus, all of a sudden, for passengers opting to travel by bus, the road journey collapsed from 1,579 km to just 434 km. Commercial traffic along this route has still not taken off – on account of customs and other procedural issues. But the possibility of commercial traffic plying this route is no longer a dream.

Talks are underway to build an elevated expressway spanning the distance between the two cities. If and when that takes off, Indians will be able to travel without having to deal with passport controls. Only those seeking to take the exit to Bangladesh would be subject to immigration and customs checks. These roads will integrate NE India into mainstream India. Discussions are also ongoing to extend the existing railway links between Kolkata and Dhaka to reach Agartala.

But there is another development that could alter all equations for the NE India region. Biplab Kumar Deb, chief minister of Tripura has already embarked on two more developmental projects that could change trading routes in the region forever.

The first is a bridge over the Feni River near Sabroom. That bridge – expected to be completed by December 2019 — is to lead to a new road headed to Chittagong, which could shorten the existing 300 km winding road between Agartala and Chittagong. The new road from the Feni bridge will be a straight wide one which will connect the port city of Chittagong to Agartala. Expect a great deal of cargo movement to the NE region to take up this route. Thus goods from Kolkata, Andhra Pradesh and Tamil Nadu will now take the sea route to Chittagong, from where they have direct access to Agartala, and to other regions in NED India.

At the same time, the chief minister is also building a jetty at at Sonambra, That will allow small ships (each capable of carrying load equivalent to that of 50 trucks) to travel from Chittagong to Sonambra and then up the Mahanadi River into the (North Eastern) Gomti River.

This has two advantages.

First, the entire North East is a riverine area. There are rivers and tributaries almost everywhere. Waterways connect more villages and towns than do roads and rail. Each village is a consumption centre, and possibly might emerge as export hubs for vegetables, fruit and even milk, meat and leather over the next couple of decades. Thus promoting the river routes will help this region much more than roads and rail.

There is a third major advantage. The army is delighted that it now has a second route to reach out to the entire North East without depending overmuch on the narrow Chicken’s Neck.

The road and rail links between Kolkata and Dhaka will gradually get dwarfed by waterways connected to Chittagong port. Since Tripura is a landlocked state – access to a sea port like Chittagong will allow it to integrate more easily with the entire South East region.

Today, almost everything Tripura needs for daily consumption is imported – (non-sticky, often basmati) rice, vegetables, fruit, even milk. Much of this comes via Siliguri which pushes up transportation costs. The new linkages will help reduce costs significantly.

But this is not all. Tripura’s chief minister has very aggressive plans for promoting travel and tourism. Tripura boasts of some of the most picturesque travel and holiday resorts. And it has religious sites that should make spiritual tourism very attractive. But travel and tourism become difficult if travel linkages aren’t there. Water transport will create this connectivity, and also reduce costs.

In addition to all this the government now wants Tripura to focus on exports as well. But that is another story.

]]>http://www.asiaconverge.com/2019/02/tripura-will-be-an-economic-powerhouse/feed/0Agartala on its way to becoming a major hub for trade and commercehttp://www.asiaconverge.com/2019/02/agartala-way-becoming-major-hub-trade-commerce/
http://www.asiaconverge.com/2019/02/agartala-way-becoming-major-hub-trade-commerce/#respondTue, 19 Feb 2019 02:18:21 +0000http://www.asiaconverge.com/?p=3467https://www.moneycontrol.com/news/business/economy/agartala-on-its-way-to-becoming-a-major-hub-for-trade-and-commerce-3556891.html Moneyconrol Agartala in Tripura could become a major hub for trade, commerce, even defence The government of India – in conjunction with the state government of Tripura – is working hard to complete the bridge over River Feni near Sabroom. RN Bhaskar — Feb 19, 2019 Four years ago, Agartala was a sleepy town.

Agartala in Tripura could become a major hub for trade, commerce, even defence

The government of India – in conjunction with the state government of Tripura – is working hard to complete the bridge over River Feni near Sabroom.

RN Bhaskar — Feb 19, 2019

Four years ago, Agartala was a sleepy town. Yes, it is the capital of the state of Tripura. And yes, it does figure in the news sometimes. But four years ago, it was too big to be called a village. Too small to be called a city. It was at best a town, but an underdeveloped one at that.

But now, you see many cars on the roads; traffic jams are not uncommon. The airport is being upgraded to touch Bangladesh’s border (it is quite possible that an immigration gate could get opened here too in addition to the existing one). A few malls have begun to make their presence felt in the town. But it has yet to catch up with most state capitals in the country. Hotels are still a bit primitive – there is not a single five- (or even four-) star hotel in the city.

But the roads are good. And the first signs of this city becoming a major tourist destination are visible. Its sanctuaries are being spruced up, with some of the best facilities any tourist centre could boast of. Its lake palace – akin to Jaipur’s famous lake palace – looks gorgeous.

But more important than these signs are the measures that are being taken – not yet reported in mainstream media – that could make Agartala the trade hub for almost all of North East India, and possibly for this entire Asian region as well.

To understand why the change is taking place, it is important to look at two maps. The first map shows how – for the past 70 years — access to the North East always depended on what is commonly referred to as the Chicken’s Neck. The Doklam crisis highlighted India’s vulnerability like never before.

Fortunately, even earlier, some measures had been embarked upon. In 1999, both India and Bangladesh agreed to start a bus service between Kolkata and Dhaka. This was further extended to another route between Dhaka and Agartala in 2001. By 2008, this connectivity was further bolstered by reviving an old rail link between Kolkata and Dhaka. The present government is in the process of extending this rail link by connecting Dhaka and Agartala.

Plans include a highway from Kolkata to Agartala which would allow transportation between the two cities without bothering about passports and visas (the present road and rail links will have to go through passport and immigration controls). Exit points for Dhaka will support immigration and customs controls. Already, the road, rail and the proposed highway have reduced the existing road link between Kolkata and Agartala from around 1579 km to just 434 km – but subject to immigration and customs checks.

But something bigger is now happening. The government of India – in conjunction with the state government of Tripura — is working hard to complete the bridge over River Feni near Sabroom. A bit of road extension from there will allow traffic from Agartala to reach Chittagong reducing the current route of around 300 km to just around 200 km.

It is this route that is likely to convert Agartala into a major trading centre for not only the North East, but also this Asian region.

Chief minister Biplab Kumar Deb is emphatic that the Feni bridge will get completed before December 2019. Goods will now flow from Chittagong to the entire North East.

Defence sources are also ecstatic. Without willing to go on record, a senior officer of the defence sources confessed that his route will become more important for army and related supply movements from India to the North East through Chittagong and Agartala.

River routes are also being developed. A jetty is being built at Sonambra, That will allow small ships (each capable of carrying load equivalent to that of 50 trucks) to travel up the Mahanadi River into the (North Eastern) Gomti River. One of the biggest beneficiaries will be Mizoram, next door neighbour, which is also landlocked. Over the next few years, river routes are likely to gain popularity over the road and rail routes because of two reasons.

These linkages will soon transform Agartala into one of the biggest commercial hubs in this part of the world. Reason: almost everything that comes into Tripura for daily consumption is imported from other parts in the region. Take rice (the non sticky, usually Basmati variety) is brought into the state from Siliguri, and so are vegetables. And milk. Plans are afoot – thanks to the work done by Central government ICAR (Indian Council for Agricultural Research) in partnership with the state government to get farmers to grow such crops and develop animal husbandry, including fishing. Thus, the costs associated with the long, winding route from Siliguri should disappear. And as the state gears up to export rice, vegetables and milk, the road ad water linkages with Chittagong will entirely change trade logistics.

Secondly, the chief minister is already making moves to wean away the 85,000 Bangladesho trek into India each year to seek out medical treatment. They travel from Agartala – using the checkpost in this city as a major crossover point, and travel to Kolkata or to other parts of India. The state has already begun negotiations with mahor hospital chains in India to take over the lagest state owned hospital and convert it into a super-speciality medical centre – without giving up its function as a primary health care center. The state hopes to be a big-time player in the medical tourism business soon.

Many more moves are on the cards, which shall be discussed later. For now, the unlocking of routes for this land-locked state – surrounded by Bangladesh on three sides — will rapidly convert Agartala into one of the biggest business centres in the region.

]]>http://www.asiaconverge.com/2019/02/agartala-way-becoming-major-hub-trade-commerce/feed/0http://www.asiaconverge.com/2019/02/gst-can-actually-encourage-cash-transactions/
http://www.asiaconverge.com/2019/02/gst-can-actually-encourage-cash-transactions/#respondThu, 14 Feb 2019 03:32:51 +0000http://www.asiaconverge.com/?p=3473https://www.freepressjournal.in/analysis/can-gst-actually-promote-a-cashless-economy/1459489 GST can even encourage cash transactions RN Bhaskar February 14, 2019 There’s a restaurant in Ballard Estate in Mumbai which is frequented by many upper middle-class customers. It is one of the few organised sector restaurants that refuses to accept payment of bills by credit or debit cards. And after you’ve paid your bill,

GST can even encourage cash transactions

There’s a restaurant in Ballard Estate in Mumbai which is frequented by many upper middle-class customers. It is one of the few organised sector restaurants that refuses to accept payment of bills by credit or debit cards.

And after you’ve paid your bill, it invariably does not return your bill to you, unless you demand that it be returned. Most customers walk off without bothering to collect the bill, except corporate executives would want to claim reimbursements from their respective offices. The restaurant charges the required 5% GST. But when the bill is not collected by customers, it is reasonable to believe that the hotel management pockets both the amount on the bill as well as the GST amount. This is because the restaurant can now conceal the billing details from the government.

Thus, the customer is poorer by 5%, and so is the government. The restaurant owner is richer by that amount.

Not returning bills to customers is something that most small restaurants do. They charge GST, as required. When they know that a bill has not been collected by any customer, they know which bills to leave out from the income tax returns.

Unfortunately, instead of discouraging cash. GST levies allows restaurant owners to make additional (clandestine) profits. This happens in the transportation and outdoor catering sectors too. And from 1 February this year, this cash economy has included the car repair segment as well. GST offset (tax credit) will no longer be available all these activities (under Section 17 (25) of the GST rules).

The non-availability of such credits and setoffs hurt honest businessman immensely. In fact, this policy of not granting tax credits actually encourages the cash economy. Had tax credit been allowed, the customer would have insisted on getting the hotel or transport receipt, and the GST credit would have got registered with the central database computers of the revenue departments.

Now the transaction goes unrecorded; even untraceable if paid for in cash.

How big could these amounts be? That is difficult to come by. But a 2017 FICCI report on the “Indian Food Services Industry – a roadmap for unlocking growth opportunities”, puts the restaurant business worth Rs.3.7 lakh crore (see table). At 5% GST, the government could earn around Rs. 18,500 crore. With the unorganised sector accounting for more than half of this industry, the government could be losing out on at least Rs.9,000 crore annually. This figure could be larger

The figures for transportation could not be found, but they too could be equally large. The simple logic is that most of us travel more often than we eat.

Had the government done that, many people would have insisted on a receipt which would get logged into the individual’s account books and hence with the government.

The government’s argument is that the work of compiling small accounts from small vendors of food and misc items is far too cumbersome. Then the right approach would have to be to exempt them from GST altogether. Why create a system that is unfriendly to already over-burdened taxpayers? Moreover, don’t electricity bills, which outnumber restaurants, not benefit from such set-offs?

Further, many executives and businessmen now travel by cab services like Meru Cabs Ola or Uber. Each of these payments is invariably linked to a mobile phone number which in turn is linked to a PAN identity. If the government is serious about improving transparency, it should have stated that all payments to services which issue receipts and encourage electronic payments would be eligible for GST credits – hence set offs. The data is already digitized. All it needs is a hookup with the revenue departments’ computers. The government could levy an additional presumptive tax on businesses that don’t permit online payment of bills. Consequently, there is no incentive for the older cab services to migrate to the GST regime either. There are more incentives for remaining a cash-based economy.

In fact, when one talks about digital services, the government continues to turn a blind eye to practices of quasi government services like municipal corporations, which allow epayments, but issue receipts without the service charges mentioned on them. The service charges are debited directly to bank accounts. This allows for cozy relationships between epayment providers and municipal authorities for transactions that cannot be monitored by state auditors or the CAG. This is where the government itself encourages graft and cozy relationships by its own municipal corporations,, even despite permitting digital transactions (http://www.asiaconverge.com/2017/04/mcgm-epayments-point-to-dangers-of-epayment/).

Thus, contrary to the government’s claims that it is keen on promoting digital transactions, its policies have encouraged cash transactions on the one hand, and have burdened taxpayers on the other.

]]>http://www.asiaconverge.com/2019/02/gst-can-actually-encourage-cash-transactions/feed/0Game India: seven strategic advantages that can steer India to wealthhttp://www.asiaconverge.com/2019/02/game-india-seven-strategic-advantages-can-steer-india-wealth/
http://www.asiaconverge.com/2019/02/game-india-seven-strategic-advantages-can-steer-india-wealth/#respondSat, 09 Feb 2019 05:09:01 +0000http://www.asiaconverge.com/?p=3455https://www.firstpost.com/business/book-by-first-time-author-spells-out-seven-strategic-advantages-that-can-steer-india-to-wealth-6056231.html Book Review: Game India: seven strategic advantages that can steer India to wealth By Jescilia K =============== The book can be got from: Amazon or Flipkart ————————- Deepak Parekh, chairman HDFC Ltd puts it quite succinctly on the jacket of the book. “Books can be critical. They can be inspirational. Seldom both. RN Bhaskar’s

Book Review: Game India: seven strategic advantages that can steer India to wealth

Deepak Parekh, chairman HDFC Ltd puts it quite succinctly on the jacket of the book. “Books can be critical. They can be inspirational. Seldom both. RN Bhaskar’s Game India-Seven Strategic Advantages That Can Steer India to Wealth traverses both the worlds.”

With endorsements from Ratan Tata, Gautam Adani and Mukund Rajan, Game India is nothing if not ambitious. This may be the author’s first book, but with a journalistic career spanning some 30 years, and with two decades of teaching experience in India and overseas, it is clear that the author knows how to weave a compelling narrative—rich in facts and figures, anecdotes and insights he has access to. He has woven his years of information and learning into the book.

The author reminds us that India and China were historically wealth generators. Somewhere, somehow, both countries registered ignominious declines in fortune, exacerbated to a great degree by colonisation. In the years to come, while China began pursuing its historical strength of money-making more consciously, India, while wishing to be a wealth creator, stumbled.

On reading Game India, one realises that part of the reason for India’s unsteady move towards economic rediscovery is its inability to focus on one of its inherent strengths—its people. And if it has failed to tap into this resource, it is for three reasons.

First, the abject record of successive governments in areas relating to education has crippled a majority of Indians. Second, scant attention has been paid to health.

Third, most leaders have not bothered to strengthen, or even genuinely respect, the judiciary; indeed it wouldn’t be wrong to say that the country’s regard for the rule of law is more in the breach than in the practice of it. A direct offshoot of this is organised crime, often abetted by those close to political leaders. This has further impaired a people. In other words, education, health, judiciary are three strengths that India has failed to harness, and due to this it has barely managed to take full advantage of a thriving population.

India, we learn, enjoys four other strategic advantages. These span milk, solar power, coastlines and riverways, and agriculture. Through rare anecdotes, Bhaskar shows how some incredible visionaries have managed to harness these strengths, even while governments may have turned a blind eye to India’s potential.

A case in point is Verghese Kurien of Amul fame, and the ideas he successfully tested to ensure that milk not only generated wealth for the nation as a whole but also empowered farmers. Sadly, successive governments failed to exploit Kurien’s vision. Instead of ensuring that farmers got at least 50 percent of the market price for their produce, governments allowed middlemen to give them only 10 percent.

Similarly, instead of promoting warehousing development (under the Warehousing Development Regulations Act), governments chose to allow the Food Corporation of India (FCI) to promote merely rice and wheat procurement. The book highlights that FCI should in reality be purchasing the wheat and rice it needs from warehouses which have auditors and assayers and which are meant to be linked to banks and commodity markets.

Even while telling us in no uncertain terms where India has erred, and detailing the many sins of omission that have hurt the economy, Game India speaks of how the nation could actually wipe out its current account deficit and become foreign exchange surplus. For instance, a recommendation is to look at converting waste to energy more aggressively, and developing decentralised clusters for power and methane generation.

With over several tables and cross references, Game India‘s facts and figures present a clear roadmap to wealth generation. Anecdotes and stories—some covering the lives of businessmen, some chronicled by India’s greatest minds, and several drawn from the interviews the author has taken during his long career makes the book an interesting read.

Game India–Seven strategic advantages that can steer India to wealth
By RN Bhaskar 280 pages
Rs 499
Penguin Random House

]]>http://www.asiaconverge.com/2019/02/game-india-seven-strategic-advantages-can-steer-india-wealth/feed/0Game India book launchhttp://www.asiaconverge.com/2019/02/game-india-book-launch/
http://www.asiaconverge.com/2019/02/game-india-book-launch/#respondThu, 07 Feb 2019 15:12:19 +0000http://www.asiaconverge.com/?p=3446Game India book release:Deepak Parekh, Chairman of HDFC, released senior journalist RN Bhaskar’s book ‘GAME INDIA – Seven Strategic Advantages That Can Steer India to Wealth’ at a panel discussion organised by the Observer Research Foundation in Mumbai on Thursday. The book is published by Penguin Random House India. The book release was followed by

Game India book release:Deepak Parekh, Chairman of HDFC, released senior journalist RN Bhaskar’s book ‘GAME INDIA – Seven Strategic Advantages That Can Steer India to Wealth’ at a panel discussion organised by the Observer Research Foundation in Mumbai on Thursday. The book is published by Penguin Random House India.

The book release was followed by a discussion moderated by CNBC TV18’s Executive Editor Latha Venkatesh. The discussants were Dr. Mukund Rajan, Corporate strategist and former and only Brand Custodian of Tata Group; Dr. Ajit Ranade, Chief Economist, Aditya Birla Group; RN Bhaskar, the book’s author and Dhaval Desai, Vice President, ORF.

“India is at the tipping point in its growth trajectory. It is already a $ two trillion-plus economy which is expected to grow to five trillion over just the next five-odd years. Bhaskar’s book and the seven potential advantages identified by him will play a critical role in India’s growth – not just to a $ five trillion economy, but for a long way into the future,” said Mr. Parekh. RN Bhaskar’s book is both critical and inspirational. It is immensely readable and perceptive and will be useful for all who want to learn about how India can solve its mounting socioeconomic challenges, he pointed out.

India may be widely acknowledged as one of the fastest-growing major economies in the world, but can this vast, diverse and heavily populated nation sustain growth prospects? Game India offers a decisive answer.

At once ambitious and engaging, it outlines seven key unrealised opportunities India can pursue to remain a leading player on the world economic superhighway: solar power; an enviable coastline and waterways; milk; agriculture; a huge population that, among other things, can yield methane; innovation; and unleashing human potential through education, justice and health.

In studying these seven strategic advantages, the book explores what has been done (or not done) thus far to exploit them, what potential they hold for the people and how they could redefine the game for this country.

Weaving together industry lore, keenly analysed data and one-on-one interviews with corporate moguls – from Verghese Kurien and the Pais of Manipal to Gautam Adani and Brij Mohan Munjal – Bhaskar’s Game India is essential reading for every Indian looking ahead.

]]>http://www.asiaconverge.com/2019/02/game-india-book-launch/feed/0Does the budget not care for human capital?http://www.asiaconverge.com/2019/02/the-budget-does-not-care-for-human-capital/
http://www.asiaconverge.com/2019/02/the-budget-does-not-care-for-human-capital/#respondThu, 07 Feb 2019 15:08:05 +0000http://www.asiaconverge.com/?p=3460https://www.freepressjournal.in/analysis/does-the-budget-not-care-for-human-capital/1453862 Interim Budget and its indifference to human capital RN Bhaskar February 7, 2019 At a time when election fever is at its peak, it is not surprising to see the tide run out. That is when you embarrassingly discover who is swimming naked. In some ways the budget reveals a chink in the thinking

The general public can be forgiven because it expects its leaders to think for them. But the leaders – both the elected ones, and even the ones who want to be elected – must be held accountable. After all, they are supposed to be law-makers and architects of a new India. But they too want freebies.

Look at the current budget too. It doesn’t even talk about investments in education. You cannot have a resurgent India without investments in health and education.

True, the government has talked about creating two lakh additional seats in institutes of higher learning. But where is the money to come from, after all the doles have been given away?

In fact, even the little (declining levels of education to GDP), that is spent is used so unwisely, that the government itself had to admit in the Lok Sabha on 5 March 2018 (in reply to the Unstarred Question No. 1385), that the rate of unemployment among the educated was higher than among the poorly-educated. The quality of education is so poor that it leaves many of the students almost unemployable.

The government’s constant defence is that education is a state subject (http://www.asiaconverge.com/2018/05/india-literacy-levels-much-lower-than-reported/). But surely, the centre can make the allocation of funds subject to minimum qualifying standards! Similarly, income tax exemptions for educational institutes could be made subject to minimum outcome standards as well. The truth is that the centre has been as negligent, or collusive, as the states.

That could explain why, even almost a year after dissolving the Medical Council of India (MCI), there is no move to abolish the licence raj for medical colleges. Everybody know sthat there is a shortage of medical college seats. Just allow any private management to set up medical colleges, charge the fees it wants provided some (say 25%) are priced lower. But ensure that tax concessions and continuation of control over the medical college would be subject to global outcome guarantees. Errant managements, like non-performing assets must be transferred to the next most deserving management which has met the outcome guarantees.

You will suddenly have many more colleges coming up with better educational standards. Is the government’s unwillingness to delicence medical colleges have something to do with the amount of capitation fees managements of such institutes charge (and possible share with others)?

As a result, you have the much vaunted Aayushman Bharat scheme, the world’s largest health insrance programme, but without enough doctors (http://www.asiaconverge.com/2018/08/ayushman-bharat-and-healthcare/). When too much of money is splurged without creating enough people qualified to implement the programme, you promote corruption and a degradation of practices. The government’s solution of allowing homeopaths and ayurveds to practice allopathy just muddies the waters. It degrades standards on the one hand, and promotes a capitation fee for ayurved and homeopath institutes as well.

If short term courses aimed at converting homeopaths and ayurveds into alopaths were a great idea, why not apply them everywhere? You could have six-month courses for converting government clerks into IAS and IPS officers. Similarly, you could have six-month courses for coverting court clerks into judges.

Don’t blame the current government alone. This malaise has been promoted by successive governments. It is currently abetted by all political parties. Read the manifestoes of all parties. None has talked about taking away school management rights from promoters who do not ensure good outcomes for students. None talks about delicensing school education and higher education.

Instead, the government wants to make compulsory the registration of all hospitals with Ayushman Bharat. The schedule of charges are so horrendously low that many hospitals would have to shut down or offer shabby treatment (which in turn will mean greasing the palms of health inspectors). The contagion could spread to destroying medicare in much the same way the government has already crippled mass primary education.

]]>http://www.asiaconverge.com/2019/02/the-budget-does-not-care-for-human-capital/feed/0Interim Budget: Great for elections, but worrisome for the economyhttp://www.asiaconverge.com/2019/02/the-interim-budget-is-good-politics-but-worrisome-economics/
http://www.asiaconverge.com/2019/02/the-interim-budget-is-good-politics-but-worrisome-economics/#respondMon, 04 Feb 2019 13:24:15 +0000http://www.asiaconverge.com/?p=3438https://www.moneycontrol.com/news/business/budget/opinion-interim-budget-great-for-elections-but-worrisome-for-the-economy-3479481.html Budget 2019 — Great for elections, bad for the economy RN Bhaskar — 04 February 2019 The mood in the BJP ranks is upbeat. The recently concluded Budget 2019 session played the right notes for wooing farmers, the middle class and possibly even the real estate sector. In terms of political strategy, the budget

Budget 2019 — Great for elections, bad for the economy

RN Bhaskar — 04 February 2019

The mood in the BJP ranks is upbeat. The recently concluded Budget 2019 session played the right notes for wooing farmers, the middle class and possibly even the real estate sector. In terms of political strategy, the budget announcements were nothing short of brilliant.

But watch the furrows on the brows of economists deepen. They know that there is little cause for being sanguine.

Four issues are quite worrisome.

The first, of course, is about agriculture. The government has announced a grant of Rs.6,000 per farmer household for those owning less than 2 hectares. The amount is meagre, but the outlays can be large. On the one hand, it will increase the centre’s bill by at least Rs.75,000 crore. On the other hand, there are good reasons to believe that the money will be inadequate.

The chart shows that even though the average (all-India) farmer income was around Rs.8,933 per month per household, agricultural income was just Rs.3,140. The farmer had to make up for household income through other means. And do bear in mind that these figures are averages. Much like the story about how a six-foot tall man drowned in a river which had an average depth of just three feet, here too the average conceals the peaks and troughs. As Nabard itself admits, at the lower end, the farmer income could be barely one-third these figures.

The low income was not because of poor agri-production. It was often because he is usually not paid enough for his produce. As can be seen from anecdotal evidence, the farmer gets barely 10% of the market price for his produce. Middlemen, backed by political heavyweights, invariably account for a good part of the difference between what the farmer gets and what the consumer pays (http://www.asiaconverge.com/2018/08/farmers-in-india-dont-earn-much-many-are-terribly-exploited/).

Clearly, the focus should be not on subsidies or income grants, but on working out a mechanism which allows farmers to be paid at least 50% of the market price (which is what Dr. Verghese Kurien of Amul fame insisted on, and succeeded in ensuring). The government has before it a time-tested model which it can implement with a few tweaks. But it hasn’t. That is unfortunate.

There is another problem with the agricultural dole. Go back to the Nabard chart. The farmer already earns more than the non agriculturist. Benefits should have been extended to this rural segment as well. But politically, the farmer is a more important vote bank. That could explain why the ethical option was swept aside and the politically expedient option was taken up instead.

The second worry is the absence of incentives for job creation. Economists fear that the freebies to farmers and the middle class (income tax exemptions) might create at best a temporary consumer boom. Without investment in capital formation, there will be little job creation. If wealth is not created, the country will end up distributing poverty. The government’s refusal to accept the findings of its statistical arm on unemployment does muddy the waters further.

And this brings us to the third problem. The government says it wants to control deficit. But there is clear evidence that the government has done this through off-budget sources of income. That could explain why a Coal India is now being persuaded to go in for a (closed-loop) share buy-back. No prizes for guessing that the proceeds will go to the government. It also explains why the government has been insisting on a higher dividend from the RBI.

]]>http://www.asiaconverge.com/2019/02/the-interim-budget-is-good-politics-but-worrisome-economics/feed/0How the govt has left the solar sector in darknesshttp://www.asiaconverge.com/2019/01/the-govt-has-muffed-up-on-the-solar-rooftop-front/
http://www.asiaconverge.com/2019/01/the-govt-has-muffed-up-on-the-solar-rooftop-front/#respondThu, 31 Jan 2019 15:55:58 +0000http://www.asiaconverge.com/?p=3434https://www.moneycontrol.com/news/business/economy/opinion-how-the-govt-failed-to-shine-light-on-the-solar-sector-3461301.html How the government muffed up on the solar front Most state grids are near bankrupt and cannot pay for the ever-increasing subsidy amounts doled out. Once the elections are over, they will have no option but to stop these freebies. RN Bhaskar – 31 January 2019 In mid January 2019, the Centre for Science

Of notable interest is the statement (http://csestore.cse.org.in/files/index/download/id/1547812153/) “Although India has set itself a massive goal of 40 GW of solar rooftop by 2022, only 3.4 GW had been installed till September 2018 — most of it by commercial and industrial customers, as the government has not promoted it with the right set of policies.”

Two and a half years later, it is quite clear that of the 6 GW that were to have been installed, only 3.4 GW have actually been implemented.

The reasons are many. Primary among them is the ministry’s sheer inability to get local state-owned grids to push Rooftop Solar Power. The state grids were reluctant to lose their prime customers (industry and business establishments) from opting for solar power. Some state government even slapped additional stand-by power charges on parties that installed solar power panels on their rooftops.

Batteries are crucial to the success of solar power because extracting power from the sun can be an intermittent affair. A fleck of cloud over the sun would cause power generation to flag. Industry needs good quality stable power supply. But with batteries becoming cheap, this intermittent power could be stored in a battery which would allow for a steady stream of good,quality and reliable power supply.

At the same time, there is no denying that solar power is the best solution for far-flung villages. Decentralised solar power generation and distribution facilities are needed there. One of the reasons why decentralised grids work is because the distance between the power generation source (the rooftop) and the consumption destination is short. The longer the transmission lines, the greater the losses (and the theft potential). State governments are reluctant to accept the changed environment.

That could also explain why the government could not meet its rooftop solar targets.

Once the elections are over, they will have no option but to stop these freebies. They won’t even have money to buy power from Independent Power Producers (IPPs) or even NTPC. State owned power stations may not have money for coal. That is when plant shutdowns will begin. To deflect criticism, state governments may give away clusters to the power sector to provide decentralised rooftop power.

That is when there is hope that the Indian power sector will change. Meanwhile the clock continues ticking.

]]>http://www.asiaconverge.com/2019/01/the-govt-has-muffed-up-on-the-solar-rooftop-front/feed/0The chimera of affordable housinghttp://www.asiaconverge.com/2019/01/the-chimera-of-affordable-housing/
http://www.asiaconverge.com/2019/01/the-chimera-of-affordable-housing/#respondThu, 31 Jan 2019 15:23:38 +0000http://www.asiaconverge.com/?p=3428https://www.freepressjournal.in/editors-picks/the-chimera-of-affordable-housing/1448875 Is the government serious about affordable housing? RN Bhaskar — 31 January 2019 Time it was, and what a time it was, it was A time of innocence, a time of confidences Simon & Garfunkel, Broken ends Fifty years is almost a life-time – it is the life of a person gone by in

Is the government serious about affordable housing?

RN Bhaskar — 31 January 2019

Time it was, and what a time it was, it was A time of innocence, a time of confidences

Simon & Garfunkel, Broken ends

Fifty years is almost a life-time – it is the life of a person gone by in dreams. That was when the government first promoted the concept of affordable housing. It was a dream first articulated through a slogan Roti, Kapda aur Makan (loosely translated – food, clothing and shelter).

Many peop0le believed that slogan. And when a successor government came out with a policy for affordable housing, people thought that their dreams were finally being given shape. That dream has lingered on even with the government that was ushered into power in 2014.

All the governments have betrayed that dream. The time for innocence is possibly over.

The last time the government tried to put a number on the quantum of houses needed in India was in 2012. At that time, the figure was pegged at around 18.78 million (see table). Since then, no government has bothered to address this situation squarely and seriously. Even numbers of houses constructed each year cannot be found. The websites of ministries are only about schemes and promises, about plans and projects. But there are no numbers about achievements. Truth remains one of the biggest casualties.

Take some figures that are bandied around. One website blithely puts the figure at around 1.5 million per year. How fanciful!

In fact, but for these rare snippets, there is just no data available. There is no explanation provided. Take for instance, the government’s own “Housing – Statistical Year Book India 2017”. The data given in Table 28.1 for housing ends with data for the year 2011 (http://mospi.nic.in/sites/default/files/statistical_year_book_india_2015/Table-28.1_3.xls). So what were the babus employed for compiling data on housing doing? Surely not collecting salaries for an extended five-year vacation?

But talk to experts, and they will tell you that there is no real seriousness when it comes to providing affordable housing. Watch the table alongside. Given India’s population, there are at least 13.57 million more people added to the country’s numbers each year. Divide this number by five (the most optimistic estimate of the average size of household) and you get 2.7 million households which now need to be housed.

It obviously means that unless you can plan for constructing 4 million houses each year, the government will never be able to clear the backlog of 35 million houses (the 2012 shortfall of 18.78 million houses plus an incremental 13.67 houses during the past six years).

So why does the government not do it? One argument often given out is that housing is a state subject. But that is a facile argument. When it came to GST, did the government not manage to get the states to sit together and hammer out a solution?

That is where the government and the real estate mafia think alike, and often work in collusion.

In fact, it is surprising that the government has not used affordable housing to consolidate both popularity as well as to provide jobs in a major way. It should remember that this is precisely what Iran did (http://www.asiaconverge.com/2015/11/housing-lessons-from-iran). It was through sensible affordable housing that Iran gave the youth their dreams, provided employment, and prevented the most terrible fallout from US sanctions. India had a magnificent example before it. It is sad to see how the government muffed it up.

]]>http://www.asiaconverge.com/2019/01/the-chimera-of-affordable-housing/feed/0Maharashtra’s specious morality and its sexual crimeshttp://www.asiaconverge.com/2019/01/maharashtras-specious-morality-sex-crimes/
http://www.asiaconverge.com/2019/01/maharashtras-specious-morality-sex-crimes/#respondThu, 24 Jan 2019 15:59:47 +0000http://www.asiaconverge.com/?p=3416https://www.freepressjournal.in/analysis/maharashtras-specious-morality-and-its-sexual-crimes/1443790 Maharashtra’s specious morality and its sex crimes RN Bhaskar – 24 January 2019 For the past one week, Maharashtra has been playing the morality card, in trying to whip up public sentiment against dance bars. It is furious with the Supreme Court for giving dance bars the legal right to function. It is now

Maharashtra’s specious morality and its sex crimes

RN Bhaskar – 24 January 2019

For the past one week, Maharashtra has been playing the morality card, in trying to whip up public sentiment against dance bars. It is furious with the Supreme Court for giving dance bars the legal right to function. It is now planning to bring out an ordinance to sidestep the apex court’s orders. At various times the state government has railed against dance bars as being demeaning towards the status of women, of causing a law and order situation, and of corroding the moral values in the state. Really?

It is time, the state was disabused about its notions about high moral standards. Just look at the data from the NCRB. In its 2016 report, it shows Maharashtra accounting for the maximum number of crimes against women, compared to all states in India. In the case of sexual crimes against children (which come under POSCO, 2012), the state comes next to Uttar Pradesh (no less), and the city of Mumbai next to Delhi.

These figures alone should tell Maharashtra that there is something extremely rotten with the culture that the government has been trying to promote.

This author would like to list a few causes for the culture beginning the stink worse than rotten fish.

First, the government has lost its sense of priorities. It has spent more legislative time in controlling dance bars rather than in dealing with farmer deaths. For the past 10 years (remember home minister R.R.Patil?) the government has been talking about how dance bars have been corrupting Mumbai. The sex-crime rates suggest otherwise.

Second, it has asked the Mumbai Police to keep an eye on dance bars, on the customers going in; It wants video cameras permitting police stations to watch how scandalous dance bars are (do the police stations want a free show of the dance performance?). Is the government trying to degrade a force once reckoned to be the most professional in India to become peeping Toms? The very same thing happened almost a decade ago, when Maharashtra tried to ban girls from working in call centres at night. Result: policemen at checkposts were looking for girls in cabs instead of looking for criminals. Stop this corruption of the police force immediately.

Thirdly, the Mumbai police is notorious for trying to either directly catch couples necking at isolated spots, or indirectly exhorting goons to do so. The police (or the goons) then threaten the couple to name and shame them, unless they pay up some money. At times the police have themselves molested girls (remember the infamous Marine drive case where a policeman raped a girl inside the chowkie?). Any form of moral policing is despicable and must be stopped. Couples need to find some place to be by themselves, especially in a city where there are few houses which can offer people the privacy they need.

Fourth, please pay heed to the body of psychologists and psychiatrists who will tell you that if you prevent people from finding expression for their (natural) sexual desires, you will find them seeking out gratification in unwelcome and clandestine ways. That is the principal causes for sex crimes increasing in Mumbai and in the state. In fact, pedophilia too increases when normal sexual expression is thwarted (http://www.asiaconverge.com/2017/03/coping-with-child-abuse/).

Fifthly, this state not only makes prostitution illegal, but criminalises customers too. Thus, the government has created a situation where the policeman, in partnership with the pimp and the prostitute, collect graft money from the sex worker as well as from the customer. Picking on such soft targets only causes sex-crime rates to soar. That is why many countries don’t ban prostitution. In fact, the only two players who make more money than the prostitute are the pimps and the policemen. True, occasionally, you hear of dance bars in Mira Road near Mumbai being raided, closed down and the girls being “rescued”. Ask the locals about the “rescue” and they will snigger. Everybody knows what that word means.

Instead look at Singapore. It legalizes prostitution. It keeps them in different areas to cater to different clientele – the rich, the middle class and the not-so-rich. The reason: Singapore has migrant workers. If they are not allowed expression of their natural desires, they will turn on other girls and women. Moreover, legalising them gives them rights. It also makes authorities monitor their medical checks for a safer health environment.

Maharashtra’s problem has been on making groups vulnerable – lovers, sex customers, sex workers and even dance bars. Mumbai has a migrant population – a large number without families. By banning prostitution and dance bars the government is actually encouraging sex crimes, especially against children.